Tariffs and Industry Impacts on Real Estate
Scott Hobbs joins Boroughs & Burbs with appraiser Jonathan Miller and analyst Noah Rosenblatt to sort out what tariffs really do to building and the luxury market.
Watch · Boroughs & BurbsTariffs and the cost of building
On episode 179 of Boroughs & Burbs, hosted by John Engel and Roberto Cabrera, Scott Hobbs joined appraiser Jonathan Miller of Miller Samuel and analyst Noah Rosenblatt of Urban Digs to work through how tariffs and market volatility hit real estate and construction. Scott’s read on the building side: the direct cost of tariffs on a custom home is smaller than the headlines suggest, the harder problem is a supply chain no one can fully trace, and the way through is tight budgets and hedging with the client.
At the top of the market, his clients were not pulling back. Watch above, or on the Boroughs & Burbs site.
What Scott said
Tariffs add far less to a custom home than the headlines suggest. By Scott’s rough math, materials are about half a project, a portion carry big import costs, and the net is a few percent, close to a normal year of escalation.
The hard part is the supply chain, not the tariff. A custom build runs more than forty trades, and the components inside a single HVAC unit can come from four countries.
For long projects, Hobbs works cost plus with tight budgets, and partners with clients on hedges: escalator clauses, or buying materials like lumber early and splitting the upside if prices fall.
Through the noise, Scott’s high-end clients were not pulling back. At the top of the market, a few points of material cost rarely changes the decision.
New construction is only about a tenth of housing inventory, so even a boom in custom building does not fix the supply shortage.
Tariffs and building, in short
How much do tariffs actually add to a custom home?
Less than the headlines imply. By Scott’s rough math, materials are about half a project, a portion of those carry meaningful import costs, and at roughly a 20 percent tariff that nets to a few percent, close to what a normal year of escalation adds. See how we work.
What is the real risk from tariffs, if not the sticker price?
The supply chain. A custom build runs more than forty trades, and the parts inside a single unit can come from several countries, so the hard part is tracing and timing materials, not the tariff itself.
How does Hobbs price a two or three year project through uncertainty?
Most Hobbs work is cost plus with carefully built budgets. When costs are uncertain, Hobbs partners with the client on hedges, escalator clauses or buying materials like lumber early, and shares the upside if prices fall. Start with a conversation.
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Featured on Boroughs & Burbs, the National Real Estate Conversation, hosted by John Engel and Roberto Cabrera.